Hello, my dear readers. I hope you had a good Christmas and will enjoy a happy, healthy, and prosperous new year in 2018.
As I write this, just after noon on the last trading day of 2017, American market are down. No much, but they are down. That’s fitting, believe it or not. For though 2017 has been a strong year for the stock market, that doesn’t mean it will rise on the final trading day of the year.
You may not know it because, in the light of all that matters, it’s not that important. But the S&P 500 has fallen on the last trading day in each of the last three years, and it’s been down seven of the last 10. The average move on those days over that last decade has been a decline of 0.11%, and the median drop has been 0.45%.
And NASDAQ – the strongest of the three main, US markets this year – has also fallen seven out of the last 10 years on the final trading session, with a little larger average drop of 0.12% and a median decline of 0.61%. The Stock Trader’s Almanac notes that though the tech-heavy index was up for 29 straight years between 1971 and 1999 on the final trading day of the year, it’s been down 14 of the last 17 years. Go figure!
Let’s not complain, however the market finishes this last day of the trading year at 2 pm. The Dow Jones Industrial Average is up about 26% this year, the S&P 500 is up about 20%, and the tech-heavy NASDAQ is up about 29%. Those are stunning numbers, the best since 2013 and very unexpected by many who saw Trump as a potential danger to investors and markets. Of course, if you weren’t invested or pulled out, this has not been a great year for your retirement portfolio.
Maybe more surprising than the returns to investors this year is how steady markets have been. Not even a5% pull back. And the DOW has risen for nine months in a row, NASDAQ for 11.
However, is this the end? Should you now get off this train? Many think so. I don’t share that negativity. We are living through a world-wide synchronous economic recovery. They don’t come along very often. We’ve just passed a powerful tax reform elixir that has yet to show its magic. But I believe it will, less for individuals, and much more for the economy, for business, for investors, and jobs. I think you should, as you might be told at an amusement park, “Sit back, buckle up, and enjoy the ride.”
Get your asset allocation right, with stocks, bonds, real estate and smaller holding in proportions you’re comfortable with, that lets you sleep at night, and then ride that out. Don’t keep fussing with it, or over it. In fact, if you’re fussing, you may not be an investor. You may be a saver, which is OK. But savers today make a percent or so on their one-year CDs. That’s not all that helpful towards retirement, but it’s better than spending one percent more.
God bless you all.